THE auto industry closed 2015 with an all-time high of 17.47 million vehicles sold, surpassing the 2000 record of 17.35 million by 5.7 percent.
Given the average national price of gasoline at around $2 per gallon, along with abundant credit and lower interest rates, automakers are predicting that demand for SUVs and higher-margin pickup trucks will continue in 2016.
“Auto makers will reach a bit deeper into their pockets to subsidize zero-interest-rate loans, masking the impact on the consumer but at the expense of [company] margins,” said Brian Johnson, a Barclays PLC auto analyst, according to The Wall Street Journal.
Among contributing factors to last year’s success was improved employment, particularly for those under the age of 34, so consumers found they could afford a new car, The Associated Press reported.
“The US economy continues to expand and the most important factors that drive demand for new vehicles are in place, so we expect to see a second consecutive year of record industry sales in 2016,” said Mustafa Mohatarem, chief economist for General Motors, according to Reuters.
Another reason for greater overall sales was the replacement of older vehicles, many of which are more than 10 years old, Krebs told the Los Angeles Times.
Overall, Americans spent approximately $570 billion on new vehicles, the Journal reported. For new cars, trucks and SUVs in December, buyers paid an average of $34,081, marking the first time TrueCar has tracked an industry-wide average transaction price more than $34,000, according to FOX Business.
“They feel a bit wealthier and more comfortable making a long-term commitment to a vehicle purchase,” said Michelle Krebs, senior analyst at Autotrader, according to the Times. “This is the sixth year of year-over-year increases in sales, and that’s unprecedented.”
December sales rose 9 percent, according to Autodata Corp. Some automakers even posted double-digit gains, but the month was still short of what was expected.
“December was a little softer than we though tit would be,” said Jessica Caldwell, senior analyst at Edmunds.com, according to the Times. “It still eked out to be the strongest month in 2015.”
In November, a total of 2.2 million crossovers and compact SUVs were sold, an 18.8 percent increase compared to the previous year, according to Kelley Blue Book.
Automakers with strong SUV sales, including Fiat-Chrysler and Toyota, performed particularly well last year, as baby boomers and millennials with growing families increasingly preferred the more spacious and versatile vehicles, Krebs told the Times.
GM, Ford and Toyota were the top three auto sellers, respectively, in the country for 2015.
“The auto industry is in a very strong place right now and a very positive place right now with a lot of momentum,” said Eric Lyman, vice president of industry insights at TrueCar, according to the Times.
Some forecasters, including TrueCar, predict US sales to hit 18 million vehicles this year. The sales growth is expected to continue at a slower rate, as millions of vehicles will be coming off leases and be put into the used car market. As a result, buyers looking into purchasing new cars are likely to opt for used ones instead.
The record-hitting year for automakers comes in spite of large recalls, including vehicles equipped with exploding Takata air bags, GM vehicles with faulty ignition switches and about half a million Volkswagen diesel-powered models involved in an emissions-cheating scandal.
